Perfect Labor Storm 2.0 is a blog that highlights workforce trends, demographic shifts, and human resources changes that will change the way employers do business.

December 2005

December 25, 2005

In urban China, the problem of elder dependency on a shrinking family is particularly severe (since there are usually no public or private retirement funds). It is referred to as the “4-2-1 phenomenon”: Four elderly grandparents, two retired parents, and one working child who is responsible for all of them.

The higher the dependency rate, the more severe the economic fallout, since money spent on social payments cannot be reinvested in production. Fewer workers and greater dependency is already beginning to slow growth in Europe and Japan and may soon affect the U.S.

The rules about retirement haven’t kept up with life expectancy. Many healthy seniors have a physiological age that doesn’t correlate with the mileage on their chronological clock. Older workers like Mick Jagger (61, working for 43 years), Michael Eisner (63, working for 41 years), Rupert Murdoch (74, working for 51 years), and Sophia Loren (70, working for 54 years)— and the rest of their generation— may influence perceptions of what it means to be an older working person.

Otto von Bismarck picked 70 as the marker of old age in 1889 while planning Germany’s first pension plan; at that time, the average life expectancy at birth was only 42 years there. By that logic, with today’s average life expectancy of 78 years, people should receive retirement support after they reach 116 years.

For business to not only survive but thrive, developed and especially western societies have two mindsets to shoot down:

(1) Workers over 55 are unemployable and

(2) Workers earn the right to retire from the workforce at ages under 60 and receive full benefits for another 20, 30 or 40 years.

December 05, 2005

US workers will be asked to pay $155 more in 2006 for medical care than they did just a year earlier, according to a recent study by Towers Perrin.

Employers will pay an extra $442.The average insurance premium for a family of four is nearing $10,000 a year.(Source: Kaiser Family Foundation)

But more doesn’t always mean better.A 2003 study from Rand Corp. showed that at best, only 55% of patients get the care doctors recommend.

One solution often proposed to contain costs is pay for performance, a plan to pay the best doctors cash bonuses for quality care.While this may boost the quality of care, it is unclear how it will save money for consumers, health plans or employers. Casting even more doubt about pay-for-performance for cost containment, finding good measurements of medical quality is easier said than done.